Rune Bjerke, chief executive of Norway’s biggest bank DNB, has had to deal with angry investment customers, borrowers and government officials in recent weeks. Now he’s decided to at least compensate some of the bank customers who lost money on misleading investment products, after the bank itself lost a landmark case in the country’s highest court, but not everyone is satisfied.
“Now we’re going to try to make things right,” Bjerke told Norwegian Broadcasting (NRK) on Wednesday. “We’re going to clean up after we suffered defeat in the Supreme Court, and compensate all of those who bought the same products (which the court branded as misleading) and who formally complained.”
Bjerke now admits that loan-financed investment products sold in 2000 and 2001 “weren’t good enough” and that the bank is prepared to pay out several hundred million kroner worth of compensation to those who suffered losses.
“I think it’s very sad that we sold products that contained errors in the prospectus, and which didn’t clearly explain the risks,” Bjerke said. Even though his bank fought a particularly persistent customer who felt wronged, Ivar Petter Røeggen, for years, Bjerke now claims DNB has learned an expensive lesson.
“We will continue to learn every day, because we don’t want to meet our customers in court,” Bjerke told NRK.
Thousands can claim millions
Both Bjerke and DNB’s lawyers spent last week’s Easter holiday poring over the Supreme Court verdict that handed Røeggen a full victory the week before. After examining its consequences, they concluded that DNB will compensate 219 small investors who bought the same product Røeggen did, along with around 90 others who filed complaints on other products that had the same errors as Røeggen’s.
Another 5,000 customers also stand to receive compensation after investing in seven other deficient products, and the bank will contact them, but they’ll have to demand compensation and have their cases reviewed. That troubles the head of Norway’s consumer council, Randi Flesland.
“We give credit to DNB and Rune Bjerke for following up on the Supreme Court’s verdict,” Flesland told website dn.no. “At the same time, the court verdict was so clear that it’s only proper and correct the bank does that.”
Interest rate issue still nagging
She also urges all banks, not just DNB, to compensate customers who lost money on defective investment products. And she said her council (Forbrukerrådet) will follow up as well.
“We need to make sure consumers actually file complaints and that the banks follow the court’s verdict,” Flesland said. “I don’t rely on the banks cleaning up entirely themselves.”
Meanwhile, DNB also faces ongoing criticism for its plans to raise interest rates on home loans starting this month, allegedly to meet what it thought would be tougher new capital requirements imposed by the state. But Finance Minister Sigbjørn Johnsen has said the interest rate hike shouldn’t be needed and both customers and other politicians are still urging DNB to drop its planned rate hike. Newspaper Dagens Næringsliv (DN) reported that loan customers were flocking to other banks, including Skandiabanken of Sweden, to avoid the rate hike, but DNB hadn’t backed down as of Wednesday.
Views and News from Norway/Nina Berglund
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